Hi Murray, Good point...the main reason I don't take every trade is that I fear the large loss. Because of this, I 'cherry pick' my system trades, forcing my own emotions on the probabilities of the next trade, usually resulting in my sitting on the sideline while my system trade turns into a missed profit. Either I must take every trade, or come up with a system that doesn't have as large of an average loss as I have currently.
Based on my backtesting and forward testing results...I didn't take every trade that is shown in those results...(much to my detriment).
ym, I trade systematically as well and it was difficult initially taking trades as they come. After a while, and much examination of trading results, I eventually convinced myself that I add little value in the trading decision process and stuck to the program. It's a human urge to second guess, meddle, fiddle with a system. I know I can't entirely remove that urge, so I limit my fiddling risk reduction - ie taking profits early or taking losses early. Whether you get over this human urge is your personal battle. Remember the story of odysseus and the sirens - bind your arms or stuff your ears with wax to avoid succumbing to the temptation of your bad habits.
Here's why. The real risk of this type of scenario actually happening? (what will actually happen in the markets) Very Low. The psychological risk of this type of scenerio actually happening? (what your mind is telling you can happen in the markets) Very High. The system sucks. It's OK. Just get another one. Best, Jimmy
Sorry if that came off a little strong. But I think it's better to just cut to the chase, correct the problem, and keep moving. Your Protective Stop is very appropriate for trading the ES. It has a lot of "chop and churn" before making a directional move. The problem is limiting yourself to just 2 pts of profit. All you have to do is move your protective stop to breakeven (+ a tick for commisons and slippage) AFTER you make your usual 2.00 pts ES, incorporate a trending indicator (like any SMA 20 to 40, EMA34, VWAP, you name it) which will tell you which side of the market to stay on, and let the 2nd half of your trade ride for as much profit as the market will give you ... 2 or 3 times a week, you're gonna catch a hell'uva trend. Best, Jimmy P.S. Spend the next month backtest - with just two contracts - and you'll see what I mean. Then you'll have the knowledge to take your trades and keep a good psychological state-of-mind, because you'll know your system has GREAT positive expectation! P.P.S. And after you've finished backtesting the system, just trade 2 contracts until you've earn the right to trade more, earn your contracts (@ about 4,000 margin per contract you'll be trading with 5% risk).
its always tough trading your own system: greed, fear... you may want to code your system making it 100% automated not giving yourself the opportunity to override it. i would be interested in seeing your results once you have automated it.
Jimmy-Jam, Thank you for your suggestions. I have thought about what you mention, but have not coded it in TS yet. I will look into coding and backtesting this more seriously, I have always thought that if I could let me winners run a bit more, that I could improve this thing. My system actually has been fully coded and automated using TS's easy-language. But I have found problems in execution and stability through-out the day b/c I cannot monitor TS while I'm at work, and I have a hard time leaving it unattended at home. I tried it for a while, but my system is pretty simple, so it, should be, easy enough for me to just place my trades in a manual manner. The glitches, data connection issues, etc... are just too common to allow TS to run unattended. On the downside: I must enter the trades myself rather than allowing the automation to drive it. Thx for the feedback! -chris
there are plenty of great sites, i hear that http://www.smartquant.com/ is really good. you may want to look into it.